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Site-Neutral Groundhog? Hospitals Urge Judge to Whack 2020 Payment Policy, Too

Analysis  |  By Steven Porter  
   November 12, 2019

The government is moving forward with 'the second year of a two-year phase-in,' even though a judge vacated the policy in its first year.

The hospitals that successfully challenged a site-neutral payment policy for 2019 in federal court have asked the judge to enforce her order against the related 2020 policy as well.

U.S. District Judge Rosemary M. Collyer ruled in September that the Centers for Medicare & Medicaid Services exceeded its legal authority when it finalized the controversial policy last year as part of the Outpatient Prospective Payment System (OPPS) final rule for 2019. Collyer vacated the policy and declined the government's request in October to put her decision on hold.

Despite that ruling, earlier this month, CMS issued an OPPS final rule for 2020 that again included a site-neutral payment policy, which reduces reimbursement rates for clinic visits at hospital-owned outpatient provider departments to match the rates paid for clinic visits in physician offices.

The final rule says CMS officials are working to ensure that 2019 clinic visit payments comply with Collyer's decision, and it argues that moving forward with "the second year of the two-year phase-in of the clinic visit policy" in 2020 is appropriate, as CMS considers whether to file an appeal.

But the hospital plaintiffs—i.e., the American Hospital Association, the Association of American Medical Colleges, Mercy Health Muskegon, Olympic Medical Center, and York Hospital—contend the government's stated rationale is bunk.

"To be clear, CMS has not just issued another rule that is unlawful for the same reasons as the 2019 OPPS Final Rule. The agency has reinstated the second year of the two-year phase-in that was promulgated—in the agency's own words, 'finalized'—in the now-vacated 2019 OPPS Final Rule," the plaintiffs wrote Monday. "That violates this Court's vacatur order."

The plaintiffs asked Collyer to vacate the relevant portion of the 2020 rule, based on her decision on the 2019 rule.

The government, which opposes the plaintiffs' request, has until November 25 to file a formal response with the court, then the plaintiffs will have until December 5 to file a reply, according to an order Collyer issued Tuesday.

The relevant final rule is slated to take effect January 1, 2020.

Legal arguments aside, the site-neutral payment policy is controversial because hospitals provide expensive services that other outpatient facilities often don't, arguably leaving hospital-owned departments with higher overhead costs.

Related: CMS Finalizes 340B, Site-Neutral Cuts for 2020

Related: Doc Groups Laud CMS' E/M Reforms, Red Tape Reductions

Related: Site-Neutral Payments: Judge Holds Her Ground in Vacating OPPS Provisions

Editor's note: This story was updated Tuesday afternoon with additional information.

Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.


The government is still considering whether to appeal the judge's decision, which vacated the 2019 rule.

The plaintiffs contend that the course CMS has charted with its 2020 rule violates the judge's order.

The policy in question reduces reimbursement for hospital-owned outpatient provider departments.

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